Group 1 - Recent market surveys indicate that suppressed rigid housing demand is beginning to be released, maintaining an "outperforming the market" outlook for the domestic real estate industry [1] - The company suggests focusing on real estate firms with strong commercial operational capabilities, such as China Resources Land, New World Development, and Longfor Group [1] - The long-term development of property management stocks is viewed positively, with attention on China Resources Mixc Lifestyle, Greentown Service, Poly Property, Binjiang Service, and Wanwu Cloud [1]

Group 1 - Longfor Group successfully completed the principal repayment and interest payment of the "21 Longfor Expansion MTN001" bond, involving a total amount of approximately 1.03 billion yuan [1] - Following this repayment, all publicly issued debts of Longfor Group due in 2024 have been fully settled [2]

Investment Rating - The report assigns a "Buy" rating for the company for the first time [2]. Core Views - The company has a broad future growth potential due to its three main business segments: development, operation, and service, which work in synergy [4]. - Revenue projections for 2024-2026 are estimated at 158.04 billion, 153.30 billion, and 149.14 billion yuan, with year-on-year growth rates of -12.6%, -3.0%, and -2.7% respectively [4]. - The company is expected to maintain a low price-to-earnings (P/E) ratio of 6.8, 6.1, and 5.6 for the years 2024, 2025, and 2026 [4]. Summary by Sections Company Overview - The company has over 30 years of experience, focusing on residential development, commercial investment, and property management across major cities in China [14]. - The company has a stable shareholding structure, with the Wu family being the largest shareholder [15]. Business Performance - In 2023, the company reported a revenue of 180.74 billion yuan, a decrease of 27.9% year-on-year, primarily due to a decline in property development revenue [21]. - The operating and service segments showed resilience, with a revenue increase of 5.7% year-on-year, contributing to 13.8% of total revenue [21]. Financial Health - The company maintains a strong financial position, with a cash-to-short-term debt ratio of 2.25 and a net debt ratio of 56% as of the end of 2023 [24]. - The company has successfully managed its debt structure, with no foreign bonds maturing before the end of 2026 [26]. Commercial Investment - The company has been actively expanding its commercial investment segment, with a focus on high-energy cities, having entered over 30 cities and opened 88 shopping centers by the end of 2023 [30]. - The company plans to open 14 new shopping centers in 2024, with a total expected area of 951,000 square meters [33].

Project Development - The company reported a completion rate of 70% for the Train New Town project in Baoding, with an expected completion date of December 2025 and a total construction area of 421,485 sqm[13]. - The company has 100% completion for the Xincheng Avenue project in Chengdu, with a total construction area of 56,073 sqm, expected to be completed by November 2024[13]. - The company holds a 50% interest in the Changping Life Science Park Project in Beijing, with an expected completion date of December 2025 and a total construction area of 114,000 sqm[13]. - The company reported a 75% unsold interest in the No. 23, Dong'an Street plot in Chengdu, with an expected completion date of December 2024[13]. - The company has a total of 30 ongoing development projects with a combined gross floor area (GFA) of approximately 3,000,000 square meters[15]. - The Pidu Zhongxin Avenue project in Chengdu is expected to be completed by May 2025, with a 100% ownership and a GFA of 158,833 square meters[15]. - The Longfor Origin project in Dongguan is set for completion in November 2025, with a 100% ownership and a GFA of 98,469 square meters[15]. - The company has a total of 20 principal development properties with varying completion dates, the earliest being in November 2024 and the latest in November 2028[18]. - The overall project interest in the Land Bridge Project in Lanzhou is 70%, with a gross floor area (GFA) of 99,593 sqm[18]. - The company has 100% interest in the Pengjiaping Xiping Street project in Lanzhou, which has a completed GFA of 88,462 sqm[18]. Market Expansion and Strategy - The company has a total of 13 cities in the Southern China region, contributing to its market expansion strategy[6]. - The company is actively developing new properties, with several projects in Chengdu and Beijing, indicating a focus on urban development[13]. - The company is exploring potential mergers and acquisitions to strengthen its market position and expand its portfolio[7]. - The company aims to increase its asset management capabilities to optimize returns on its property investments[7]. - The company is actively expanding its portfolio with multiple projects across various cities, focusing on residential and commercial developments[30]. - The company is focusing on strategic locations in major cities to enhance its market reach and customer base[32]. - Future projects are in the planning stage, which may further increase the company's market share and operational capacity[32]. - The Group is focused on enhancing operating cash flow, improving efficiency, and steadily reducing indebtedness while optimizing inventory structure[44]. Financial Performance - The Group reported a core attributable profit of RMB 4.75 billion for the first half of 2024, with revenues from investment property operation and services reaching RMB 13.1 billion, a year-on-year increase of 7.6%[41]. - The average financing cost for the Group is 4.16%, with the average contract loan term extended to 9.19 years, indicating a stable financial position[41]. - As of mid-2024, the Group's interest-bearing debt amounted to RMB 187.4 billion, a reduction of RMB 5.2 billion compared to the beginning of the year[41]. - The Group's property development revenue for the first half of 2024 was RMB 33.76 billion, with a gross profit margin of 7.4% and an average selling price of RMB 11,145 per square meter[60]. - The Group delivered a total gross floor area of 3.029 million square meters in the first half of 2024[60]. - The total contracted sales for the first half of 2023 were RMB 98.516 billion, indicating a significant decrease in sales year-over-year[69]. - The Group's net rental income from investment property operations for the first half of 2024 was RMB 6.61 billion, with shopping malls, rental housing, and other income contributing 78.4%, 19.8%, and 1.8% respectively[75]. Rental Income and Occupancy - Longfor Commercial achieved an overall occupancy rate of 96% across 91 shopping malls in 20 core cities by the end of June[50]. - The long-term rental apartment brand Goyoo generated rental income of RMB 1.31 billion in the first half of the year, with an occupancy rate of 95.6%[51]. - The overall rental income for the first half of 2024 showed a positive trend with several properties maintaining high occupancy rates above 90%[80]. - The rental income from shopping malls reached RMB 8.29 billion, a significant increase from RMB 5.32 billion in the same period of 2023, representing a growth of 55.5%[84]. - The average occupancy rate for shopping malls was 96.0% in the first half of 2024, slightly up from 95.4% in the same period of 2023[84]. Corporate Governance and Shareholder Information - The Company aims to retain existing employees and attract new talents through the Restricted Share Award Scheme[169][170]. - The Company has complied with the Corporate Governance Code, except for the dual roles of the Chairman and CEO held by Mr. Chen Xuping, which deviates from the code provision C.2.1[173][176]. - The Board declared an interim dividend of RMB0.22 per share for the six months ended June 30, 2024[183]. - Eligible shareholders can choose to receive the interim dividend in cash, new shares, or a combination of both under the Scrip Dividend Scheme[183]. - As of June 30, 2024, HSBC International Trustee Limited holds 4,372,437,207 ordinary shares, representing approximately 64.609% of the company's equity[157].

Investment Rating - The report maintains a "Buy" rating for the company [3] Core Insights - The company reported a revenue of 46.86 billion yuan for the first half of 2024, a year-on-year decrease of 24.5%, and a net profit attributable to shareholders of 5.87 billion yuan, down 27.2% year-on-year [2] - The development business continues to face pressure, while diversified operations support performance; inventory reduction needs to accelerate, and the debt structure is improving [2] - The company’s sales for the first half of 2024 were 51.1 billion yuan, a decline of 48.1%, with over 90% of sales coming from first- and second-tier cities [2] Financial Performance Summary - Revenue breakdown for H1 2024: Development business revenue was 33.76 billion yuan (down 32.3%), operational business revenue was 6.61 billion yuan (up 4.3%), and service business revenue was 6.49 billion yuan (up 11.1%) [2] - The overall gross margin was 20.6%, a decrease of 1.8 percentage points year-on-year, primarily due to a 6.9 percentage point drop in the development business margin to 7.4% [2] - The company’s net profit forecast for 2024-2026 has been revised down to 10.93 billion yuan, 11.61 billion yuan, and 13.25 billion yuan respectively [2] Debt and Cash Flow - As of June 2024, the company’s total debt was 187.4 billion yuan, with a net debt ratio of 56.7% and a cash-to-short-debt ratio of 1.01 times [2] - The average loan term is 9.2 years, indicating a stable financial condition [2] Market Position and Future Outlook - The company plans to open approximately 10 new shopping malls in the second half of 2024, with a total of 91 malls in operation by mid-2024 [2] - The report suggests that despite current market pressures, the company is expected to maintain steady long-term growth due to its diversified business model [2]

Investment Rating - The report maintains a "Buy" rating for the company [3]. Core Insights - The company reported a revenue of 46.86 billion yuan for the first half of 2024, a year-on-year decrease of 24.5%, and a net profit attributable to shareholders of 5.87 billion yuan, down 27.2% year-on-year [2]. - The development business continues to face pressure, while diversified operations support performance; inventory reduction needs to accelerate, and the debt structure is improving [2]. - The company’s sales in the first half of 2024 were 51.1 billion yuan, a decline of 48.1%, with over 90% of sales coming from first- and second-tier cities [2]. - The company has a total land bank of 41.41 million square meters, down 8.8% from the end of 2023, indicating a depleting inventory cycle of approximately 5.7 years [2]. - The company opened three new shopping malls in the first half of 2024 and plans to open about ten more in the second half [2]. - The average loan term has been extended to 9.2 years, with a net debt ratio of 56.7% and a cash-to-short-debt ratio of 1.01 times, indicating a stable financial condition [2]. Summary by Sections Financial Performance - Revenue for 2024 is projected at 158.81 billion yuan, with a decline of 12.1% year-on-year; net profit is expected to be 10.93 billion yuan, down 14.9% [5]. - The company’s gross profit margin is 20.6%, a decrease of 1.8 percentage points year-on-year, primarily due to a drop in the gross margin of the development business [2]. Debt and Cash Flow - As of June 2024, total borrowings were 187.4 billion yuan, down 5.2 billion yuan from the end of 2023, with cash reserves of 50.1 billion yuan [2]. - The company maintains a healthy financial status with a debt-to-asset ratio of 58.6% after adjustments [2]. Market Outlook - The report anticipates continued pressure on sales and profit margins in the real estate market, leading to a downward revision of profit forecasts for 2024-2026 [2]. - The current stock price corresponds to a price-to-earnings ratio of 4.9X for 2024, indicating a valuation that reflects the company's diversified and stable development [2].

Investment Rating - The investment rating for the company is "Accumulate" [1] Core Views - The company's performance in the first half of 2024 was impacted by its development business, leading to a year-on-year decline in revenue and net profit. Maintaining liquidity is the top priority [3] - The company has effectively covered its debt due within the next year with available cash, despite a decrease in total interest-bearing debt [3] - The operational and service segments are increasingly contributing to the company's performance, with a notable growth in revenue from these areas [3] Financial Performance Summary - In H1 2024, the company reported revenue of 46.86 billion yuan, a decrease of 24.5% year-on-year, and a net profit of 5.87 billion yuan, down 27.2% year-on-year [3] - The overall gross margin was 20.6%, down 1.8 percentage points year-on-year, with the development business gross margin under pressure at 7.4% [3] - The company's sales continued to face challenges, with total sales amounting to 51.12 billion yuan, a decline of 48.1% year-on-year [3] Debt and Liquidity Management - As of August 23, 2024, the company had a cash balance of 50.06 billion yuan, which effectively covers its debt due within the next year [3] - The company’s interest-bearing debt decreased by 9.5% year-on-year to 187.42 billion yuan, with a net debt ratio of 56.7% [3] Operational Highlights - The company opened three new shopping malls in H1 2024, achieving a total operational area of 8.29 million square meters with a rental rate of 96% [3] - Rental income from shopping malls reached 5.32 billion yuan, an increase of 6.2% year-on-year, while the rental income from its rental apartments also grew by 6.5% [3] Future Earnings Forecast - The company’s revenue is projected to be 163.53 billion yuan, 154.84 billion yuan, and 147.71 billion yuan for 2024, 2025, and 2026 respectively, with corresponding net profits of 10.98 billion yuan, 10.35 billion yuan, and 9.95 billion yuan [3][4]

Investment Rating - The report maintains a "Buy" rating for Longfor Group (00960) with a 6-month outlook [1] Core Views - Longfor Group's 2024 interim results show a 24 5% YoY decline in revenue to RMB 46 86 billion and a 27 2% YoY drop in net profit to RMB 5 87 billion [1] - The company's operating and service businesses contribute over 80% of core profits, indicating an optimized profit structure [1] - Longfor Group has significantly improved its debt structure, with short-term debt pressure gradually easing [1] - The company's multi-channel business model, particularly in operations and services, provides stable support to help navigate industry cycles [1] Financial Performance Revenue and Profit - 2024 H1 revenue: RMB 46 86 billion (-24 5% YoY) [1] - 2024 H1 net profit: RMB 5 87 billion (-27 2% YoY) [1] - 2024 H1 core profit: RMB 4 75 billion [1] - Gross margin: 20 6% (-1 8pct YoY) [1] - Core profit margin: 10 1% (-0 5pct YoY) [1] Sales and Development - 2024 H1 contract sales: RMB 51 12 billion (-48 1% YoY) [1] - Sales area: 3 655 million sqm (-37 0% YoY) [1] - Development business revenue: RMB 33 76 billion (-32 3% YoY) [1] - Development business gross margin: 7 4% (-6 9pct YoY) [1] Debt and Liquidity - Total debt: RMB 187 42 billion (-9 5% YoY) [1] - Cash on hand: RMB 50 06 billion (-30 9% YoY) [1] - Net debt ratio: 56 7% (-0 5pct YoY) [1] - Cash to short-term debt ratio: 1 01x [1] Operations and Services - 2024 H1 rental income: RMB 6 61 billion (+4 4% YoY) [1] - Shopping mall occupancy rate: 96 0% (+0 6pct YoY) [1] - Rental housing occupancy rate: 95 6% (+1 9pct YoY) [1] - Property management area: 3 7 billion sqm (+5 7% YoY) [1] Financial Forecasts Income Statement (RMB million) - 2024E revenue: 171,699 75 (-5 0% YoY) [4] - 2025E revenue: 178,584 91 (+4 01% YoY) [4] - 2026E revenue: 184,978 25 (+3 58% YoY) [4] - 2024E net profit: 12,400 93 (-3 49% YoY) [4] - 2025E net profit: 13,298 27 (+7 24% YoY) [4] - 2026E net profit: 14,822 38 (+11 46% YoY) [4] Balance Sheet (RMB million) - 2024E total assets: 696,806 61 [4] - 2025E total assets: 700,620 54 [4] - 2026E total assets: 715,525 38 [4] - 2024E total liabilities: 463,812 13 [4] - 2025E total liabilities: 449,703 85 [4] - 2026E total liabilities: 424,632 43 [4] Key Ratios - 2024E gross margin: 16 92% [4] - 2025E gross margin: 17 92% [4] - 2026E gross margin: 18 92% [4] - 2024E net margin: 7 22% [4] - 2025E net margin: 7 45% [4] - 2026E net margin: 8 01% [4]

Investment Rating - The investment rating for the company is "Outperform the Market" [2][4][13] Core Insights - The company experienced a significant decline in revenue and net profit in the first half of 2024, with total revenue of 46.86 billion yuan, down 24.5% year-on-year, and a net profit of 5.87 billion yuan, down 27.2% year-on-year [3][6][10] - The operational and service business showed resilience, contributing over 80% to the core profit, with service revenue increasing by 7.6% [3][6][10] - The company maintains a healthy debt structure with a net debt ratio of 56.7% and an average borrowing cost of 4.16% [4][6][10] Financial Performance Summary - Total revenue for 2024 is projected to be 168.14 billion yuan, with a year-on-year decline of 7.2% [1] - Net profit for 2024 is expected to be 11.61 billion yuan, reflecting a 9.6% decrease year-on-year [1] - The company’s gross margin is forecasted to be 17.0% in 2024, slightly improving to 17.5% by 2026 [1][14] Business Segment Analysis - The development business revenue decreased by 32.3% to 33.76 billion yuan, accounting for 72.0% of total revenue [3][6][10] - Rental income from operational services increased by 4.3% to 6.61 billion yuan, representing 14.1% of total revenue [3][6][10] - The company’s property management and related services revenue grew by 11.1% to 6.49 billion yuan, making up 13.8% of total revenue [3][6][10] Debt and Financing - As of the end of the first half of 2024, the company had total borrowings of 187.42 billion yuan and cash on hand of 50.06 billion yuan [4][6][10] - The cash-to-short-term debt ratio stands at 1.01 times, indicating a balanced liquidity position [4][6][10] Valuation and Price Target - The estimated EPS for 2024 is approximately 1.69 yuan, with a projected price-to-earnings (P/E) ratio of 6-7 times, leading to a target price range of 10.12-11.81 yuan per share [4][13]

Investment Rating - The investment rating for the company is "Outperform the Market" [2][3][7] Core Views - The company experienced a significant decline in core net profit by 28% in the first half of 2024, with total revenue of 469 billion yuan, down 24.5% year-on-year. The attributable net profit was 59 billion yuan, a decrease of 27.2%. The core net profit, excluding minority interests and fair value changes of investment properties and financial derivatives, was 48 billion yuan, down 27.9% [2][4][5] - The property development business faced challenges, with revenue dropping to 338 billion yuan, a 32% decline year-on-year. However, the operational and service revenue grew by 7% to 131 billion yuan, providing stable cash flow to mitigate the impact of the downturn in development business [2][4][5] - The company maintains a robust land reserve, with a total of 41.41 million square meters and an average land cost of 4,729 yuan per square meter. The high-quality land reserves account for 73% of the total area, representing 78% of the sales value [5][6][7] Financial Forecasts and Indicators - Revenue projections for 2024 and 2025 have been adjusted downwards to 154.3 billion yuan and 139.8 billion yuan, respectively, due to the decline in the transfer scale. The attributable net profit forecasts for the same years are 11.4 billion yuan and 11.0 billion yuan, with corresponding EPS of 1.66 yuan and 1.60 yuan [2][7][8] - The company's financial health is stable, with a debt-to-asset ratio of 59% and a net debt ratio of 57%. The company has 501 billion yuan in cash and a total interest-bearing debt of 1,874 billion yuan [5][6][7] - The company operates 91 shopping malls with a total operational area of 8.29 million square meters, and the operational revenue for the first half of 2024 was 131 billion yuan, with service revenue growing by 11% [6][7]